The rapprochement between the Soviet Union and the United States, tenaciously pursued by Brezhnev and Nixon and defined by them, with notable exaggeration as a ‘new era of collaboration’ in international relations has numerous, complex causes. The main ones are political in nature, to be set against the new rise of revolutionary forces since 1967-8. The principal leaders of the strongest imperialist power and of the Soviet bureaucracy have been working towards the formation of a kind of counter-revolutionary ‘united front’, whose aim is to maintain the world status quo. Of course, the two partners continue to have divergent interests. The different socio-economic character of the two countries leads them to take up different positions on the international arena: for instance the USSR gives aid—however inadequate—to North Vietnam and the Provisional Government of South Vietnam, while the United States gives massive backing to the Thieu régime. Furthermore, neither of the two powers intends to give up the struggle for world supremacy—and hence for the enlargement of their respective spheres of influence whenever the opportunity arises. Nevertheless, as we have said, both partners consider it more opportune in the present period to allow ‘what unites them rather than what divides them’ to prevail.
Apart from these political considerations, however, there are—on both sides—powerful economic interests which impel the USA and the USSR towards each other. For the United States, the first object is to increase its own exports, not so much of agricultural produce as of machinery and ‘technologically rich’ products. In the second place, the Soviet Union could, in the long term, offer a possible alternative solution to the energy crisis which, for both political and economic reasons, is looming ever larger. Moreover, there is the prospect of a long-term positive trade balance with the Soviet Union (even in the short term, the United States had a surplus in her trade with Russia in 1972 and this will almost certainly be repeated both in the 1973 figures and in 1974). This last point is exceptionally important in view of the relation between the American balance of payments and the position of the dollar.
It would be wrong, however, to exaggerate the short-term importance of trade with the Soviet Union for the American economy. In 1972, trade between the two countries totalled around six hundred million dollars—i.e. slightly more than 2% of Soviet and much less of US foreign trade. It is doubtful whether the figure for 1973 will exceed one thousand million dollars. What is more, most of this trade is made up of Soviet cereal purchases. These, despite the bad functioning of Russian agriculture, cannot remain as the stable basis of Soviet imports. Rather, Soviet purchases from the United States will tend to shift from agricultural goods to machinery and manufactured goods. At the same time, while these purchases are likely to remain at around the one thousand million dollar level, the purchasing power of the Soviet Union—as we shall see—is limited, due to the difficulty it has in finding an outlet for its own products on the United States market. The longer-term perspectives for Soviet trade are determined by a number of factors which will gradually become clearer as we examine the situation of the Soviet economy and its foreign trade. Such an examination is also needed in order to establish what economic drives and interests have contributed on the Soviet side to the rapprochement with the United States.
The Soviet Economic Crisis
The Soviet economy is clearly in a situation of grave crisis (see Quatrième Internationale No. 9). The figures for 1973, published at the December meeting of the Soviet, might appear to contradict this judgement. However, although the good harvest in 1973 and an immense effort of mobilization have brought back under control a situation which was becoming catastrophic, the targets fixed by the five-year plan are still far from being reached. Even if the targets for 1974 are attained, the shortfall will still remain very considerable. This means that the basic problems of the Soviet economy remain unsolved, and that it will only need a new failure in the field of agriculture to precipitate a crisis all the elements for which still exist. Moreover, the Soviet bureaucrats are quite aware of this, to the point where it seems that at least a section of them is ready to brave the political risks of a return to the economic reforms.
Among the symptoms of the crisis have been the disastrous harvest in 1972, the decreasing rhythm of development of industrial production (especially of consumer goods), and the inadequate rise in the productivity of labour. The first consequence has been a serious investment crisis, marked by an increase in unfinished industrial construction, by phenomena of an inflationary type (which, it should be said, take different forms than in a capitalist economy) and by an increasing technological backwardness.
In the second place, the Soviet bureaucracy is proving incapable of reversing the traditional priority accorded to the production of means of production over that of consumer goods; the power structures of Soviet society seem to push forward ‘naturally’ the continuing growth in the production of the former.
Finally, the targets set by the plan for scientific research are systematically underfulfilled. This leads to a growing technological gap between the Soviet Union and the advanced capitalist countries, despite the fact that the enormous Soviet investments in the sectors of research and education ought to give the USSR a considerable lead in this field. Even in the space sector, where Russia once seemed to be leading the way (although this is now being questioned), today American supremacy is incontestable.
The Soviet economic crisis is substantially different from that of the capitalist countries. To begin with, the Soviet economy is separated from the world capitalist economy (we shall see later by what mechanisms) and is only influenced by its cycles to a negligible extent. Leaving aside its own specificity, the Soviet crisis is one of under-production and not of over-production: thus it is more analogous to (but not identical with) the crises of pre-capitalist societies. All the phenomena associated with the crisis appear in different forms than in a capitalist society. For example, as already pointed out, this is the case with inflation. As was noted at a recent seminar on ‘Banking, Money and Credit in Eastern Europe’ (Brussels January 1973): ‘This phenomenon [inflation] appears in different and less acute forms in these countries and its causes are not the same. In the vertically controlled economies, the aspect of inflation that is most striking is the fact that prices do not rise continually. To be sure, there is a moderate and camouflaged rise in prices, but, in reality, inflation in Eastern Europe is characterized by a chronic shortage of goods, by queues and by the accumulation of purchasing power. This form of inflation does not seem to present such a problem as that which the Western governments have to solve.’ (p. 39 of the report)
We can say that the underlying causes of the crisis flow from the fundamental contradiction of a transitional economy, namely that between the principle of planning and the law of value. Of course, owing to the profound bureaucratic degeneration of Soviet society, the economic crisis becomes especially serious and acute, because the law of value finds expression not only in the residue of private production or the black market, but in the agents of planning themselves—the bureaucrats—by means of individual incentives, thus shaping planning itself. Concretely, the bureaucratic management of the enterprise, through the system of individual incentives, is interested in obtaining from the centre supplies in excess of its real needs, so as to realize with the greatest ease and without undue effort the targets laid down by the plan (and thus to pocket the bonuses tied to production). The central bureaucracy, for its part, is well aware of this situation and assigns to the enterprises targets in excess of their paper possibilities, hoping that the management will have recourse to their existing illegal reserves. The result is a continual dissipation of resources that is concretized in periodic crises of investment.
On the other hand, the bureaucrats are not interested in a continual process of technological innovation, since such a process would make more difficult the fulfilment of the quantitative targets set by the plan. As there is no competitive market of the capitalist type, so there is no ‘objective’ drive to innovation which makes itself felt in the pocket and thus in the personal interests of the bureaucrats. The mechanism which is thus created is extremely rigid and makes very difficult any attempt to re-allocate resources (e.g. between heavy and light industry), although such a re-allocation would have undeniable political advantages for the bureaucracy as a whole.
At least partially aware of these problems, the bureaucracy tried some ten years ago to get out of the economic crisis by imposing the so-called economic reform. The substance of this lies in a modification of the system of personal incentives of the bureaucrats, in such a way as to make their interests functional to the rationalization of investment, to a continual process of technological innovation and, thus, to a rapid development of the economy. However, this operation, if it were to bear full fruit, would lead to a process of restoration of capitalism, for reasons that the Fourth International has repeatedly pointed out. Such a process would in its turn threaten the very roots of bureaucratic power. This is why the reform in the USSR was inaugurated with the greatest caution, in a more or less emasculated form and then finally buried, as soon as it became clear that, even in a scaled down form, it would give rise to phenomena which the central bureaucracy would not be able to control.
Today the same problems are confronting the bureaucracy as ten years ago. And the bureaucracy (or, at least, a considerable section of it) is looking for a way out through ‘co-operation’ with the strongest capitalist country and thus, in fact, with the world capitalist market as a whole.
Before examining whether and under what conditions the bureaucracy will be able to solve the Soviet economic crisis by taking this path, it is necessary to look briefly at the characteristics of Soviet foreign trade, which is the principal instrument for the implementation of such ‘co-operation’.
Soviet Foreign Trade
Soviet foreign trade, totalling around 25 milliard roubles in 1972 (1 rouble = 1.30 dollars) constitutes a very small percentage of world trade, although it is true that in the last twenty years it has grown much faster than the national income. (Soviet foreign trade grew by 800% between 1950 and 1973. 1950 was, of course, the height of the cold war, but even taking 1956 as the point of departure, the rise has been around 400%. And yet, in 1969/70 the USSR was 130th in a list of 185 countries in terms of per capita foreign trade; with 84 dollars per capita, it stood far behind the USA—375 dollars, Italy—445, or France—642).
Soviet foreign trade is still substantially marked by on one hand the policy of blockade of the imperialist powers and on the other the isolationist policy of Stalin. Lenin and the Bolshevik leaders had introduced the monopoly of foreign trade in the hands of the workers’ state (a monopoly still in existence) not to isolate the USSR from the world market, but to prevent the pressures of the world market from favouring or provoking the restoration of capitalism. Stalin, on the contrary, following his bureaucratic and anti-Marxist myth of socialism in one country, made use of the monopoly to conduct an autarkic policy, the source of grave waste. In reality, his aim was the maintenance of bureaucratic domination, sheltered from any foreign influence. The situation began to change only after the death of Stalin, but at that time the USSR found itself faced with not only the world capitalist market, but also a system of non-capitalist states, controlled or politically influenced by the Kremlin (the ‘peoples’ democracies’ and China). Thus, trade developed in a parallel way both with the world capitalist market and with the so-called ‘socialist’ countries.
Today, only 20% of Soviet foreign trade takes place with the developed capitalist countries, 10% with the under-developed countries and 70% with the ‘socialist’ countries. Different principles govern trade with the ‘socialist’ countries and with capitalist countries. In the former case the prices adopted are not those obtaining on the world market and import-export is based on long-term contracts, the duration of which generally corresponds to that of the five-year plans. We do not have the space to tackle the much discussed problem of ‘exploitation’, of which numerous currents in the ‘peoples’ democracies’ as well as the Chinese leaders accuse the USSR in relation to the Comecon countries. It is enough for us to stress that, after the Stalin period when the USSR conducted a policy of pure rapine with regard to the other countries, economic and commercial relations became subject to contradictions between the various bureaucracies. The results of these contradictions depend on the political relation of forces, which bestows an indisputable advantage on the Soviet bureaucracy and permits the principles which regulate its exchanges to depart from the ‘objective’ mechanisms of the world market. Amongst other things, the manufactured products which are the objects of trade, whether they originate from the Soviet Union or from other Comecon countries, are generally of a lower quality to those on the world market and would have great difficulty in finding other outlets.
The commercial ties of the USSR with the world capitalist market thus remain extremely limited, even weaker than is indicated by the figures of total foreign trade. If we examine the structure of Soviet trade with the advanced capitalist countries, a curious and contradictory feature immediately strikes us. Although the Soviet Union is the second industrial power in the world, the composition of its foreign trade is that of an under-developed country. Raw materials make up the bulk of its exports, whereas most of its imports are manufactured or semi-finished goods (above all, machinery or semi-finished goods for industrial use). The reason for this anomaly lies mainly in the poor quality of Soviet manufactured articles which, with a few exceptions, are not able to compete with those of the capitalist countries. The responsibility for this situation can no longer be attributed to the original backwardness of Soviet industry, but must be laid at the door of the Soviet bureaucracy. The poor quality of products is due to the poor quality of management of the economy. For these reasons, the Soviet Union has, up till now, been a victim of the so-called ‘price scissors’ between raw materials and manufactured goods, that is of the phenomenon whereby the prices of the latter rise while the prices of the former remain stagnant. (The present rise in the price of raw materials is noteworthy, but has not yet been shown to represent a long-term tendency. Anyway, the important thing is to see whether this rise is compensated by or is lower than the rise in the price of finished products.) It is well known that this ‘price scissors’ is one of the mechanisms whereby the exploitation of the under-developed countries by the imperialist countries has been realized.
Exploiting Russia's Natural Resources
This structural position of Soviet foreign trade constitutes one of the main obstacles to a rapid expansion of economic relations with the USA and the imperialist countries in general. In fact, whilst, as we have seen, a rapid development in Soviet manufactured exports cannot be counted on, the USSR also has a very narrow margin for the growth in its export of raw materials. The present-day level of production and the rise planned for the coming years will scarcely cover internal needs—we should not forget that the Russian economy, despite its crises, is developing very rapidly—the growing needs of the Comecon countries and the long-term contracts already signed with a number of West European countries. It is true that there seem to be enormous reserves of a series of highly important raw materials—notably petroleum, gas and timber. However, these are to be found in regions lacking any advanced infrastructure and subject to difficult climatic conditions, which means that to exploit them will require colossal investments.
This, in fact, is the road on which Soviet bureaucrats and American managers are now embarking. The United States are undertaking huge investments, that is to say, they are offering the long-term credits required for the purchase of machinery necessary for the creation of an infrastructure and for the exploitation of the deposits. In exchange, they will receive the raw materials they need, which for a whole period will serve to reimburse the credits they have granted. However, the road in question is a pretty long one: the projects now being discussed for the exploitation of natural gas and petroleum reserves will not be realized, at best, before 1980. Moreover, it is a road fraught with difficulties.
For its part, the Soviet leadership is counting on the fact that these colossal projects for the development of Russia's natural riches (to the order of several tens of thousands of millions of dollars) will serve not only to increase exports, but also to develop the country itself. It aims to ensure that the American credits will also permit the extraction of raw materials to cover the needs of the Soviet economy, that the oleoducts will pass through consumer regions, etc. For their part, the Americans object that such an imposition would render the projects ‘uneconomic’, i.e. more costly than possible alternatives outside the Soviet Union (Nigeria, Indonesia, Algeria). The successful conclusion of these enormous contracts is being undermined by this sort of difficulty, which is simply the concrete expression of the contradiction between two logics: that of the plan (of which the bureaucrats are, willy-nilly, the bearers) and that of profit and the world capitalist market. However willing they may be to strengthen links with the United States, the bureaucrats must take into account the existence of an internal opposition (i.e. internal to the bureaucracy). Since the fall of Khrushchev, this opposition has not dared contest the Brezhnev line openly and globally; but it is beginning to murmur against ‘selling off the country’s natural riches’, and this makes more difficult the granting of important concessions to the Americans. On the other hand, even the multi-nationals most interested in business with the USSR must take account of the opposition which still exists in the United States to establishing too close a link with a power whose interests remain in many respects opposed to those of the United States.
Obstacles to Partnership
But even if these considerable difficulties can be overcome, the situation of the USSR in relation to the world market will still remain predominantly that of a supplier of raw materials and purchaser of manufactured goods. In order to change radically the structure of Soviet foreign trade, in order for the expansion of trade with the US and the capitalist West to serve to modernize or ‘rationalize’ the Soviet productive apparatus, ‘co-operation’ would have to be established not only in the sector of raw materials, but also, and above all, in that of finished products. These past months, the Soviet bureaucrats have tirelessly wooed the numerous American businessmen who have been landing in Moscow, seeking to convince them to conclude co-production agreements in this field. Here, however, the difficulties are still greater than in the field of raw materials, and the more there is talk of products rich in added value and technology the greater they become. In fact, the more complex the product, the more Western capitalist demands complete and effective control over the production process. The opposite is the case for the Soviet leaders: for the moment, they are prepared to receive (or rather, apply for) credits, to sign long-term supply agreements and to accept technical and even managerial consultants. However, they are not quite prepared to hand over to others or to share with them the management of the enterprise or to permit direct ownership of capital in them.
Here, too, appears that same contradiction between the Western capitalists, who are interested in enterprises exclusively oriented towards export, and the Soviet bureaucrats, who, for the reasons we have given, accept the creation of enterprises only if they serve internal development as well. Evidently, the management of the internal contribution network would remain in the hands of the state. (It is interesting to recall here that Yugoslavia, which a few years ago introduced legislation on foreign investments, making far more concessions than the Soviet bureaucracy is prepared to make (participation in share-capital, possibility of partial re-export of profits, etc.), was bitterly ‘disillusioned’ at the poor results obtained. The Western capitalists, particularly the Americans, preferred to invest in other countries, where the legislation on foreign investments was much more ‘liberal’ than in Yugoslavia.)
Conclusion
Thus, as we have seen, the penetration of American (and international) capital into the Soviet Union will come up against considerable objective difficulties, whatever the subjective intentions of Brezhnev and his group. The reasons for this difficulty lie in the social (non-capitalist) character itself of the Soviet Union. As we have already pointed out, the theoretical basis of the practical contradictions examined above lies in the struggle between the law of value, represented by international capitalism, and the law of the plan, badly but nevertheless still represented by the Soviet bureaucracy as a whole. Certain sectors of the bureaucracy at certain historical moments can, more or less consciously, stake everything on a logic of capitalist restoration. But the bureaucracy as a whole can only oppose this logic, not from any devotion to the ideals of socialism, which have been stifled by it, but because—due to its social nature—it is inevitably linked, however defectively, to the structure of the planned economy. Concretely, the great majority of bureaucrats are already becoming increasingly aware that their own positions of power and the privileges they derive from them are necessarily linked to the planned economy and that, in the event of a passage to a ‘market economy’ and thus—ultimately—to the restoration of capitalism, they will not succeed in integrating themselves in the new power structure.
Does this mean perhaps that the bureaucracy, in the given historical circumstances, i.e. in the absence of a socialist and revolutionary working-class alternative, presents itself as the defender of what remains of the conquests of October (planned economy, with everything that flows from it, including, for example, the extremely ‘generous’ rhythms of the factories, the low rents, etc.)? Certainly not. Or, at least, only to a very limited extent. The fact is that the bureaucracy is the worst and feeblest of defenders of the planned economy, whether because it distorts planning to its own caste ends and throws the economy into crises through the waste that flows from such distortions, or because within the bureaucracy itself the tendencies are continually reproduced, whose final logic is the restoration of capitalism. But it is important to stress that these tendencies have quite precise limits in the dual and ambiguous nature of the bureaucracy itself.
On the political level, the present line of Brezhnev is nevertheless extremely risky. It tends, in fact, to present ‘economic co-operation’ with the United States as the panacea for all the ills which afflict the Soviet economy. If such a policy shows itself to be bankrupt, as we think we have shown it will, then in the medium term, the Brezhnev team might find itself confronted with an extremely menacing political crisis. The possibility has already been raised that one wing of the bureaucracy might revolt against the line. Moreover, it should be borne in mind that considerable expectations will be aroused in the masses—by the propaganda barrage we can expect to be mounted—expectations of a swift rise in the standard of living that will be sharply disappointed. Thus, if Brezhnev is brought down by a faction of the bureaucracy (which, as we said, is a medium-term probability), this will in effect be a preventive coup to forestall the explosion of a mass movement. However, it is not out of the question that we shall see events of the type of Szczecin or Gdansk, which would create a completely new situation in the Soviet Union and enable the re-construction of an opposition on a new basis. Such an opposition would differ from the present one—crushed by repression after political isolation and defeat—in that it would at last be linked to the aspirations of the masses.
Despite appearances, the old mole of revolution is still tirelessly burrowing away in the Soviet Union, even if its work is being carried out further underground than elsewhere.